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The BYD Opportunity: Tesla-Like Growth at a Fraction of the Price
Written by Leo Miller. Published 9/26/2025.
Key Points
- BYD jockeys with Tesla for dominance in electric vehicles.
- However, BYD's market capitalization is only a fraction of Tesla's, despite similar fundamentals.
- This difference creates an interesting opportunity in BYD stock. However, Chinese government intervention is a palpable risk.
In the electric vehicle (EV) landscape, two companies stand head and shoulders above the rest. Elon Musk's Tesla (NASDAQ: TSLA) needs little introduction as the dominant U.S. EV player and one of the world's ten most valuable stocks. On the other side of the Pacific, Chinese automaker BYD (OTCMKTS: BYDDY) has emerged as a powerhouse, ranking as the world's third-largest automotive stock by market cap and one of only three EV companies to achieve profitability.
Tesla and Li Auto (NASDAQ: LI) are the other two profitable EV firms. However, Li's $20 billion in last-12-month sales pales in comparison to the $92 billion and $118 billion generated by Tesla and BYD, respectively, placing Tesla and BYD in a league of their own.
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With that backdrop, the fundamental question for investors is: Is BYD a stock worth considering?
Tesla vs. BYD: Similar Financials, Stark Valuation Gap
Year-to-date, Tesla's market capitalization stands around $1.4 trillion, while BYD's is about $130 billion—less than one-tenth of Tesla's value. Yet BYD reported $118 billion in last-12-month sales, roughly $26 billion more than Tesla's $92 billion.
Even excluding BYD's mobile handset segment, its automotive revenue of $96 billion still surpasses Tesla's $92 billion, underscoring BYD's superior top-line performance at a fraction of the market cap.
Profitability metrics are equally close. In the first half of 2025, BYD's automotive gross margin was approximately 20%, compared with Tesla's 18%. BYD's EBITDA margin stood at about 15.5%, versus Tesla's 14.8%. Net income in H1 2025 was $1.4 billion for BYD (4.2% margin) and $1.6 billion for Tesla (5.2% margin). With fundamentals this similar, Tesla's valuation premium becomes striking.
Chinese Government Influence Complicates BYD's Outlook
Much of BYD's growth has been fueled by Chinese EV subsidies, which in turn have driven overproduction and sparked price wars. Combined with government efforts to curb deep discounts, these factors caused BYD's quarterly net profit to fall 30%. Still, the company grew H1 net profit by 14% year-over-year.
Outside China, BYD is thriving: international revenue jumped 50% in H1 2025, and in April the company outsold Tesla in European EV registrations for the first time, extending its lead through July according to EV Magazine.
Nonetheless, China remains BYD's most important market—accounting for about 73% of automotive revenue—which makes the stock sensitive to Beijing's policy shifts and market interventions.
Buffett Sells BYD, But Valuation Remains Compelling
Warren Buffett's Berkshire Hathaway recently sold its entire stake in BYD. However, Berkshire has been gradually trimming its position since Q4 2022 at substantial gains, suggesting the exit was part of routine portfolio rebalancing rather than a vote of no confidence.
Overall, BYD trades at a significant discount to Tesla despite comparable revenue and margins. Even if BYD's share price doubled, its market cap would remain far below Tesla's, highlighting a compelling risk-reward opportunity—especially given BYD's strong international momentum.
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